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FOREX-Dollar retreats as traders brace for more U.S. data

Published 03/05/2021, 12:13
Updated 03/05/2021, 12:18
© Reuters.

© Reuters.

* USD hits three-week peak on JPY, steady elsewhere
* KRW dips on N. Korea tension
* Ethereum hits record peak
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Ritvik Carvalho
LONDON, May 3 (Reuters) - The dollar retreated after its
recent bounce on Monday as investors made a cautious start to a
week crammed with central bank meetings and big-ticket U.S.
economic data, waiting for clues on the global inflation outlook
and policymakers' responses.
Trade was thinned by holidays in Japan, China and Britain,
which kept a lid on volatility, leaving the greenback to trade
where it settled after a Friday leap. It slid back to $1.2054
per euro EUR=EBS and crept to a three-week high of 109.66 yen
JPY= .
Comments by Luis de Guindos, the European Central Bank's
vice president, helped the euro gain against the dollar at the
start of the London session. The ECB can start to phase out
emergency stimulus measures when the pace of coronavirus
vaccinations reaches a critical level and the economy picks up
speed, he told an Italian newspaper. The dollar index =USD , measured against six major
currencies, fell back to 91.097 by midday in London, down from
an earlier Asian session high of 91.390.
The index dropped 2% through April as a positive view of
global recovery prospects lifted trade-exposed currencies at the
dollar's expense, but bounced with upbeat U.S. consumption data
on Friday.
"We remain bearish USD linked to peak US exceptionalism, and
a broadening global recovery elsewhere," said CitiFX analysts
Ebrahim Rahbari and Calvin Tse in a note to clients.
"We attribute the USD rebound late last week in part to
noise around month-end flows, but note the risk for higher US
rates to change the FX trajectory. Meanwhile, BRL and CAD remain
among the favourites, while JPY was held back by rising rates,
and several EMs by idiosyncratic headwinds."
The Australian and New Zealand dollars were marginally
firmer on Monday, though not enough to recoup a dip suffered on
Friday. AUD/
The Aussie AUD=D3 rose 0.3% $0.7735 to trade around its
20-day moving average, while the kiwi NZD=D3 edged 0.3% higher
to $0.7177, also just above its 20-day moving average. Sterling
GBP=D3 was the outperformer against the dollar among the G10
group of currencies, up 0.4% on the day at $1.3872.
The South Korean won KRW= hit a one-week low after North
Korea vowed it would respond to what it regards as hostile U.S.
policy, while pressure for a national lockdown in India pushed
the rupee INR= a little lower. In crypto markets, ethereum broke past $3,000 to post a
fresh record peak of $3,203.18. DELUGE

Purchasing Managers Index figures for manufacturers were
positive in Asia and Europe on Monday and those due later are
expected to show growth picking up speed in the United States.
However the week's major focus will be on U.S. manufacturing
surveys due Wednesday and April labour market numbers on Friday.
Forecasts are that 978,000 jobs were created in the month.
However analysts say the market response to a surprise either
way may be hard to guess, as investors have begun to fret that
strong data may prompt central bankers to taper their support.
"The risk is for a hotter number," said Chris Weston, head
of research at broker Pepperstone in Melbourne.
"But will good numbers lead to a broad risk-off vibe, as
traders' price in higher rate expectations, and the dollar
rallies," he added. "I suspect we're getting to a point where
really good data could start to become bad for markets."
Dallas Fed President Robert Kaplan caused a stir on Friday
by calling for beginning the conversation about tapering,
although Federal Reserve Chair Jerome Powell has been clear that
he is likely to be patient.
Powell is due to speak later on Monday and will be followed
by a raft of Fed officials this week. Central bank policy
meetings are also scheduled this week in Australia, Britain and
Norway.
In Australia, no policy changes are expected on Tuesday
although traders will look to a speech by deputy Reserve Bank of
Australia governor Guy Debelle on Thursday for insight into the
bank's thinking around its bond purchases outlook.
Asset purchases are likewise the focus when the Bank of
England meets on Thursday, as well as perhaps an upgrade of its
economic outlook, while Norges Bank - which projects hiking
rates this year - is expected to stick with its hawkish tone.


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World FX rates https://tmsnrt.rs/2RBWI5E
Ethereum hits record high, quadruples in value in 2021 https://tmsnrt.rs/3398mwf
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